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Code red: insurers reject scathing report card

April 10, 2019

Insurers and the Insurance Council have come out strongly in defence of their performance after a report showed a 32% rise in breaches of their voluntary code of practice last financial year.

There has been a “very marked increase” in the number of self-reported significant breaches since last July, according to General Insurance Code of Practice Governance Committee Chairman Lynelle Briggs, who questioned the industry’s commitment to the code.

But insurers disagree with her assessment. IAG, Suncorp and the Insurance Council of Australia (ICA) say the jump in the number of reported breaches reflects insurers’ efforts to improve their compliance frameworks.

“As we continue to improve our monitoring and supervision of the code, we continue to experience increased numbers of reportable breaches,” a Suncorp spokesman told insuranceNEWS.com.au today.

“The increase in reported breaches represents improved identification and capture, not necessarily an increase in the number of breaches occurring.”

The spokesman says the breaches reported by Suncorp “are not significant breaches or systemic issues, but rather lower-level individual breaches like missing a timeframe by one day. Where issues have been identified, remediation activities have occurred as part of our compliance with the code.”

Suncorp has also stepped up efforts to increase its quality assurance program since 2017, which shows it takes the code “very seriously”.

“We see the code as a mechanism to continue to improve our business and how we serve our customers,” the spokesman said.

“We had identified weaknesses in our monitoring processes relating to the [code] a few years previously and took the appropriate action to strengthen this, prior to the royal commission being announced.”

IAG says it has seen a small increase in reportable breaches, which it attributes to its handling of compliance-related matters.

“Where an issue has been identified, our priority is to contact the customer and take all the necessary steps to rectify the issue, while doing everything we can to prevent it happening again,” a spokesman told insuranceNEWS.com.au today.

“As part of meeting the objectives of the code, we remain focused on ensuring we have the best systems in place to identify any reportable breaches of the code and to continue to raise them appropriately. We believe this is also an important way the wider industry can improve outcomes for customers.”

ICA spokesman Campbell Fuller says the industry body plans to discuss with its members “significant issues” raised in the governance committee’s annual report.

“The code has been focused on rectification and remedy of breaches, which has delivered improvements to processes and better outcomes for customers,” Mr Fuller told insuranceNEWS.com.au.

“The industry is committed to improving the reporting of code compliance breaches.”

The Financial Rights Legal Centre says the increased breaches demonstrate the futility of a self-governing code.

“We take the position that codes of practice should be made a part of the contract with the consumer,” Policy and Advocacy Officer Drew MacRae told insuranceNEWS.com.au. 

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Phoenix Risk Services Pty Ltd endorses the Insurance Brokers Code of Practice. To obtain a copy of the code click here